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Justice Dept. wins $31 million redlining settlement with L.A. bank

City National Bank was accused of discriminating against Black and Hispanic residents by avoiding mortgage-lending services in some neighborhoods

Assistant Attorney General for Civil Rights Kristen Clarke speaks at a 2021 news conference at the Justice Department in Washington. (Andrew Harnik/AP)
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The Justice Department announced a $31 million settlement on Thursday with a Los Angeles-based bank over charges that it discriminated against Black and Hispanic residents by avoiding mortgage-lending services in specific neighborhoods, the largest-ever financial award in a redlining case, officials said.

City National Bank agreed to the consent order, which is subject to court approval, after prosecutors alleged that the financial institution discouraged residents in predominantly Black and Hispanic neighborhoods of Los Angeles County from applying for loans from 2017-2020.

Federal authorities said the bank opened a single branch in those neighborhoods over the past two decades, and there was no employee assigned to generate mortgage applications in that office. During the same period, City National opened or acquired 10 branches in majority-White neighborhoods.

Competing banks received more than six times as many applications from applicants per year in the majority Black and Hispanic neighborhoods, prosecutors said.

“Redlining is a practice from a bygone era, runs contrary to the principles of equity and justice, and has no place in our economy today,” said Assistant Attorney General Kristen Clarke, who announced the settlement at a news conference in Los Angeles with Martin Estrada, the U.S. attorney for the Central District of California.

“This settlement should send a strong message to the financial industry that we expect lenders to serve all members of the community and that they will be held accountable when they fail to do so,” Clarke said.

City National Bank officials have denied wrongdoing. In a statement, the bank said: “We disagree with the allegations, but nonetheless support the DOJ in its efforts to ensure equal access to credit for all consumers, regardless of race.”

Bank officials said they are going beyond the consent order, having this week announced an expansion of commercial and residential mortgage loan programs for underserved populations.

Under the federal settlement, City National has agreed to invest at least $29.5 million in a loan subsidy fund for residents of majority Black and Hispanic neighborhoods in Los Angeles County. The bank will spend $500,000 on advertising and outreach to minority residents, and spend $750,000 to develop community partnerships. And the bank will open a new branch in a majority Black or Hispanic neighborhood and devote at least four mortgage loan officers to those communities, according to the settlement.

Justice officials touted the agreement as a victory for the department’s efforts to target redlining, an initiative that has secured more than $75 million from private lending institutions since its launch in October 2021. Among that total is a $20 million federal settlement with Trident Mortgage in Pennsylvania in July and a $13 million settlement with Lakeland Bank in New Jersey in September.

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